Insurance Commentary

May/June 2008

Managing Workers’ Comp: Dispelling the Myth of the Bad Employee

Skillfully managed early intervention in workers’ comp cases helps employees get back to work sooner and mitigates fraudulent claims

Frank Pennachio Director of Learning Frank Pennachio, CWCA, is the co-founder and director of learning at the Institute of WorkComp Professionals in Asheville, N.C., the largest network of workers’ compensation professionals in the nation. He also is president of a workers’ compensation insurance agency and a licensee and trainer for Injury Management Partners. E-mail: frank@workcompprofessionals.com

Many employers believe that bad or fraudulent employees drive up workers’ compensation costs. When an employee is off on workers’ comp for an extended period of time, it’s not uncommon for an employer to say, “Tom was a model employee for many years. I can’t believe he’s milking the system. He should have been back to work weeks ago.”

While the notion of abuse is widespread in the compensation system, particularly for such “invisible” injuries as strains and sprains, good employees are unjustly vilified. There is no evidence that competent, honest and loyal employees abuse the system. Rather, it’s the system itself that induces needless disability and high costs.

Fraud Does Happen

Fraudulent claims are those filed by employees who were never hurt and say they were or who were hurt outside of work and claim the injury to be work-related. They make for memorable anecdotes—the employee with the injured back who is seen on video salsa dancing. But in reality such claims are rare. Those that do occur are often the result of poor hiring choices, so by doing the proper background investigation before hiring, an employer can minimize the chances of fraud.

The biggest problem is workers who don’t get well as expected, not as a result of intentional malingering but as a result of delayed recovery. This is a disability duration out of proportion to the severity of the injury or illness. For many, the injury begins as a common problem—a sprain, back injury or a slip and fall—that escalates into a prolonged or even permanent withdrawal from the workforce.

Injuries disrupt workers’ daily lives. Even a minor injury may seem like a major occurrence because it is unfamiliar and frightening or it’s occurred at a time when there is stress in the workers’ lives. Employers often fail to inform employees about what to expect when an injury occurs, creating further anxiety. Worried about how their coworkers perceive their injury, they quickly become socially isolated, lose their sense of productivity and purpose and sink into depression. Their ability to deal with the frustration and pain lessens and the magnitude of the injury becomes distorted. Yet, the system turns a blind eye and keeps treating them medically.

Prolonged absences then morph into a “disability attitude.” Work defines a person’s identity in a number of ways, including the self-respect that comes from earning a living. According to clinical psychologist Kevin Gaffney, “With delayed recovery, comes the issue of identity disturbance.”

When that identity is taken away and the claim progresses beyond the expected medical recovery, injured employees begin to view themselves as disabled. The longer an employee stays away from the workplace, the more difficult it becomes to reestablish the discipline of being on the job eight hours a day. Once this disability attitude sets in, the motivation to return to work is compromised.

In fact, the longer a worker stays away from the workplace, the less likely he or she will be to return. Research confirms that there is only a 50% chance that an employee who has been absent for 12 weeks will return to full employment.

While injured workers need encouragement and nurturing, the employer’s reaction, or lack of action, often aggravates the situation. Harboring feelings that injured employees are the “villains,” the employer focuses on resolving the resulting production issues and has little or no contact with them. The injured workers’ sense of self-worth and identity spirals downward and animosity and distrust build. Litigation begins to look like the only available alternative.

A report by the American College of Occupational and Environmental Medicine, “Preventing Needless Work Disability by Helping People Stay Employed,” notes that “only a small fraction of medically excused days off work is medically required—meaning work of any kind is medically contraindicated. The remaining days off result from a variety of non-medical factors such as administrative delays of treatment and specialty referral, lack of transitional work, ineffective communications, lax management and logistic problems. These days off are based on nonmedical decisions and are either discretionary or unnecessary. Participants in the disability benefits system seem largely unaware that so much disability is not medically required. Absence from work is ‘excused’ and benefits are generally awarded based on a physician’s decision confirming that a medical condition exists. This implies that a diagnosis creates a disability.”

Simply put, the problem is that claims become exaggerated when a worker gets hurt, gets frustrated, is not getting better and no one is talking to him. Eventually, good workers slide into self-destructive behavior. Too many employers believe that these workers are malingerers, or even worse, crooks. Rarely do they recognize that the real threat is not the cost of the claim, but the loss of a valuable, competent employee who is unnecessarily out on a disability that the system has regrettably created.

Workers’ compensation is not “found” money. Unlike personal injury settlements, workers’ compensation is a no-fault law and lump-sum settlements are usually based on estimates of how long employees are likely to be unable to work. Each state varies in the maximum and minimum amounts required for weekly temporary disability benefits, as well as in how any permanent disability is determined. In addition to the physical pain and the loss of their self-image as self-sufficient members of their families and society, injured and ill workers can face financial difficulties. No one who has been out on workers’ comp has improved their life as a result.

To avoid this debacle, early intervention is key. Employers need to understand that workers’ compensation is not strictly a financial issue, but a people issue. Bringing injured employees back to work as soon as possible in a medically approved capacity is the cornerstone of preventing long-term disability. When the people component is managed well, there will be better financial outcomes.